Woollen summers
The house of GBTL and OCM from the Donear Group launched a brand of luxury fabrics and apparels-Grado-in September 2018. Grado, with film actor Amitabh Bachchan as brand ambassador, offers a wide product basket of luxe fabrics for blazers, trousers, and suiting, bringing the best from OCM and GBTL, under one roof. MD Vikram Mahaldar provides an insight into the woollen-and-worsted suiting market in India, the making of Grado, and explains why wearing wool for winters is a myth in an interview with Hiral Oza.
What is the global market size for suiting & shirting fabrics? What is the percentage of luxury fabrics?
The value of the global textile mills market totaled $667.5 billion in 2015 (around 83.1 per cent were fabrics and 16.9 per cent were yarns), up 1.5 per cent from a year earlier. The compound annual growth rate (CAGR) was 4.4 per cent between 2011-15. Asia-Pacific accounted for 54.6 per cent of the global textile mills market value in 2015 and Europe accounted for a further 20.6 per cent of the market.
The global textile mills market is forecast to reach $842.6 billion in value in 2020, an increase of 26.2 per cent since 2015. The CAGR of the market for the period 2015-20 is predicted to be 4.8 per cent. The Indian textiles industry is expected to grow to $250 billion by 2019 with CAGR growth of 14 per cent from 2009. The domestic market is expected to grow 20 per cent in coming years including e-commerce business. India ranked first in the Global Retail Development Index 2017.
What are the latest dyeing trends being used at OCM?
Although OCM stands for Oriental Carpet Manufacturers, it is known in the industry as the Original Colour Masters (as a slang). We are known for providing a wide variety of colours. Besides providing fabrics in the conservative blues, blacks, browns and greys, we also provide a wide range in green, pink, maroon and other such bold colours. We have played with colours across the spectrum. Earlier, the US and European markets preferred the cliched blues, blacks, and greys and Indian men were open to experimenting with bolder colours. But in recent times, a lot of European brands and designers, inspired by Indian designs, have begun using brighter shades for suiting purposes. But the most trending colours internationally are pastels like light grey, pink, and maroon. Come summer 2019 we will see this trend catching up in India too.
Do you plan to expand your product offering?
Yes, we do plan to come up with a collection in cotton. Consumers are being increasing choosy. Although vendors prefer wool and woollen blends for both jackets and trousers, for summers consumers widely prefer cotton. Cotton in bottoms have been in India for the last 20 years and more in the RTW category, but in RTS it has come in the last 3-4 years. Until now, tailors weren't skilled enough to stitch cotton bottoms and jackets. Because of improved finishing technologies, tailors today can easy stitch. Grado both by the house of OCM and GBTL is owned by the Donear Group, which has a strong presence in cotton. We will soon come up with a large range of cotton trousers and jackets. We plan to launch it in January 2019. We want to cater to customers throughout the year. That is one of the reasons why Grado was launched-we don't want to stick to just wool, woollen blends and PV fabrics, but also include cotton.
How has the market for ready-to-stitch (RTS) fabric or fabric in rolls for apparel evolved once ready-to-wear came in? What are the market trends now and your forecast for the next five years?
Spoilt for choice when it comes to RTS fabric. OCM offers about 5,000 SKUs every season and that choice isn't available in the ready-towear (RTW) category. Therefore, we are willing to experiment on different designs, colours, textures vs the slightly more conservative RTW market shies away from. Although RTW is taking a larger portion of the pie increasingly, especially in tier 1 and 2 cities; but because the pie is growing, there is a corresponding and relative increase in the segment for both RTW and RTS.
Over the next years, RTS will continue to grow. The reasons being:
- Choices of people across demographics is different, and difficult for RTW to cater to all those choices;
- Because of different cultures, it's hard to assign a standard body type/fit to the entire population.
What special does Grado offer that has not yet been offered by OCM or GBTL?
Both OCM and GBTL have occupied distinct positions in consumers' minds in terms of product. OCM was exclusively for worsteds and GBTL for poly-blends. However, Grado gives us an opportunity to offer the customer a product across these boundaries, therefore now Grado will be able to compete the nearest and only competitor Raymond. None other than Grado and Raymond has the complete basket for wool, wool blends, poly/viscose (PV), cotton, PC suiting and shirting fabrics in their product basket. Grado caters to the younger generation, which was missing so far. It offers the customers a unique basket of products and spoils them for choice-be it in design, colour or price points.
What will be in vogue in suiting fabrics for next season?
In terms of designs, earlier it was just stripes, which later moved to checks. Today, it's still checks, but subtle ones and with micro structures. But the general trend is moving back to chalk stripes. You can see celebrities donning them. Largely plain, textured, and subtle checks dominate the designs in suiting fabrics.
What price points do you expect to work well?
Pricing has been challenging continuously. That's one of the reasons why the wool business is so stagnated. Europe and the US were big markets for worsted fabrics. Departmental stores in the US sell worsted suits for $100-150 since selling at full prices is a challenge too. Hence, manufacturers for these brands have moved from wool to poly blends. Globally, the woollen suit markets have moved to cottons and poly-rayons mainly. But the silver lining is that the luxury business segment, which is less than 0.5 per cent of the global suiting fabric market is increasing. Shoppers of luxury items do not prefer RTW and demand niche products in cashmere or cashmere blended with exotic wools, silks, linens, and fine cotton. This business is growing.
Which are the major markets for Grado fabrics in India and abroad?
Grado from the house of OCM: Punjab, J&K, HP, Delhi, UP, Bihar, Maharashtra, AP, Karnataka, Gujarat. Grado from the house of GBTL: North and Hindi-speaking belt, Delhi, Haryana, Punjab, Tamil Nadu.
What is the target market for Grado?
Traditionally before the amalgamation of the two companies, OCM's client base included consumers of the age group 30-55 years because we were selling premium fabrics which youngsters do not have the disposable income to buy. GBTL was also targeting a more mature audience (25-50 years) for its PV suiting fabrics. Grado brings the best of both and caters to younger folks. Catering and appealing to the younger generation were also the reason behind having Amitabh Bachchan as the ambassador for the brand. With Grado we want to reach out to the young audience, which is about 50 per cent of the nation's population now, who we think of as our future customers. Though Grado is backed by two heritage brands, the designing and colours are to meet the needs of the 20-30-yearold customers. Our marketing will also increasingly focus on these customers.
How was 2018 for the company and what are the expectations for the next year? Any plans for capacity expansions next year?
This year after amalgamation of the two brands and after a wide marketing campaign for Grado, we are expecting a 20 per cent growth in our domestic business from last year. Next year will be even bigger. We expect a 25-30 per cent growth with all our marketing and sales efforts.
The weak competition in this niche is also boosting the growth for us. We are completely sold for December and the orders received now are for January 2019. We do plan some mini expansions. We plan to expand combers and spinning systems for better utilisation of our capacities. We plan to upgrade our facilities for producing better yarn quality. We have plans to upgrade to high-speed machines for weaving. We want to upgrade too with minor increase in capacity. We are looking at consolidation more than increasing the capacity. We want to capture the market right now and make optimum use of our current capacity.
How have you been doing in exports all these years? What are the future strategies?
Until 2004, we were exporting to markets which have Indian tastes such as the Middle East. After 2004 exports towards the western world-primarily for suits and trousers, picked up. There was an apparent shift for a more 'value for money' option and thereby the increased use of PV as a fabric. GBTL envisaged a 'K-Match' technique which enabled colour consistent fabrics. For example, in the West, suit separates were sold. The demand for trousers was higher than the suit jacket and needed to be replenished more frequently. To match the colour and tint of the trousers with the pre-existing suits, K-Match was envisaged. GBTL mastered K-match and started supplying in a big way to the US and the UK.
Currently, we (OCM) are catering to 70 customers in India and abroad (including brands such as Perri Ellis, Hager and retailers such as Ross/ Marks & Spencers, Cosco and much more). We have added (PV + spandex) for women and menswear. In the future, we plan to innovate constantly with new fibres like modal and produce blends poly/nylon, poly/ modal spandex, poly/wool (with low percentage of wool); drive more value for money; counter online sales eating into brick and mortar stores. The idea is to increase the breadth of the products-high-end to lower-end range of products (poly spandex). With an increase in the number of women stepping into workforce, the rise for workwear for women as a category has also increased. Therefore, to cater to this segment would be a focus for us.
What is the annual production capacity at Grado? What percentage is for domestic consumption and what percentage would be exported?
GBTL has a capacity of over 35,040 spindles and 140 looms for production and three looms for sampling. The process house has the capacity to finish 20 million metres per year. GBTL has its own captive 8 MV thermal power plant to take care of its own power needs. About 60 per cent of production is for exports. OCM's annual capacity is 8 million metres.
Which fabric blends are popular in the domestic and the export markets?
Cotton is preferred pan-India because of the tropical climate.
PV is preferred for its affordability, durability and innovative designs.
Worsteds are preferred in the northern part of the country for suits and jackets due to its drape and other utilitarian benefits.
All three products are exported for similar reasons with cotton leading the pack followed by PV fabrics and worsteds preferred by a niche customer set.
Please tell us about the retail distribution of Grado fabrics.
Both the companies (OCM and GBTL) distributing Grado products have different networks and will continue to work so. GBTL primarily supplies to wholesale, who further sell it to retailers. The company has over 2,000 retailers in its network. OCM has a different distribution model. We supply to wholesalers and directly to retailers too. We cater to 1,500 retailers across the country directly and through our wholesalers we reach 5,000 retailers. Since ours is a premium product, only the best retailers in this niche will house Grado by OCM. Grado by GBTL caters to the masspremium category.
Any plans to go online?
Planning an e-commerce portal with Grado products. This has been in the offing for a while, because we wanted to establish our brand first.
E-marketplaces tie-ups as well will be explored.
Individually both companies (OCM and GBTL) have done so in the past.
Wool is for winter is a myth you say, and at OCM you want to try to change this mass mindset in India. How do you plan to do that?
Wool as a fibre has the highest moisture absorbency. It is even higher than cotton. Cotton can absorb about 8-10 per cent while wool can absorb 30 per cent of moisture. So, when you sweat, woollen fibres can absorb the moisture and through the capillary actions the sweat comes to the surface of the fibres and gets perspirated. Hence, it's comfortable to wear wool even in summers. But the only challenge is that it has scales causing hairiness. This irritates the skin. But beyond a certain micron-say 19.5-and in 80s counts, the hairiness will not be a trouble and the fabric will still be moisture absorbent. This is general knowledge but limited to certain people. Most people in India think wool equals sweater. It's hard for them to understand the difference between woollen and worsted. With awareness, this mentality should fade away. Woolmark is working towards changing the mindset and educating people that wool is for all year round.
